Reports Q2 2021 results on Thursday 22nd July after closing time
Expected Revenue: $1.06 Billion
EPS forecast: $0.072
If Twitter (NYSE:) reports its second quarter results tomorrow, the company behind the microblogging app may not have much to show investors that will impress them. User expansion slows after the pandemic-induced bump as the economic environment becomes uncertain for growth stocks amid rising Delta variants.
This trend was evident when the company released its product in April and warned of the slowdown for the period ending June 30. The San Francisco-based company expects to increase its user base by "low double digits" for the remainder of the year. 2021, with the lowest expected growth in the second quarter.
Another downside that could weigh on Twitter's revenue in this report is that, unlike its bigger competitors Facebook (NASDAQ:) and Alphabet (NASDAQ:), the company doesn't make much money from direct response advertising. , such small thriving businesses open after the lockdown last year. The social media company relies more on advertising from big brands, which make up 85% of its total revenue.
Twitter Weekly Chart.
Despite these challenges, Twitter's stock had a strong run during the pandemic, rising more than 80% in the past year as investors focused on the company's long-term appeal and its future growth plans.
New Growth Initiatives
The company has recently unveiled many initiatives to drive growth, including a highly anticipated subscription service to diversify its revenues through advertising alone.
Dubbed to Twitter Blue, the product provides access to tools to 'undo' a message before making it public, organize bookmarked tweets into folders and read longer tweet threads more easily.
In addition, Twitter's recently acquired newsletter platform Revue allows creators to publish newsletters and monetize them. Another monetization project the company is working on is a monthly subscription product called Super Follows, which allows people to charge their followers for exclusive content, such as tweets, newsletters, or access to audio calls.
All of these steps are part of the company's goal to double its revenue by the end of 2023 and expand its user base to 315 million daily active users from the current 200 million. The subscription model could help Twitter diversify its business, especially as the pandemic-driven activity wears off in user engagement.
However, these growth plans have not enthused analysts in the short term. They see no compelling reason to recommend a buy recommendation for the stock.
Chart: Investing.com
According to an Investing.com poll of 39 analysts, Twitter stock could fall 10% from current levels in the next 12 months, with 25 forecasters calling a "neutral" give rating.
Starting point
After the pandemic-driven boom in user growth, Twitter's earnings report tomorrow may show a return to more subdued revenue and earnings growth compared to competitors such as Facebook and Google parent Alphabet.
That said, Twitter has gained solid momentum in making its platform one that is increasingly appreciated by advertisers. Any weakness after gains should be a buying opportunity for those looking for a good entry point.
